Still hitting store after store in the Great COVID Hunt for Toilet Paper? Don’t get frustrated. Just substitute your PPP forgiveness application for those highly prized, soft-as-cloud white rolls. Why? The answer’s simple: On Monday, June 8, the Trump Administration announced it will “promptly” issue new rules and guidelines for small businesses seeking forgiveness of their PPP loans. The changes include a modified loan forgiveness application.
Beyond the unexpected bonus of toilet paper, what can you anticipate from the upcoming changes? So far, the PPP has benefited thousands of small businesses that otherwise would have closed their doors this spring. The workforce appears to be in the recovery stage, as May’s unemployment numbers dropped substantially. And rumor has it that there are relief funds still available – if not through the PPP, then through some other low-interest loan program. Given yesterday’s announcement, it’s very possible that the current PPP loan recipients may qualify for additional funds.
Keep that possibility in mind when you make your decision about staying with the 8-week loan period or opting for the newly approved 24-week period. There’s so much to consider, it could take hours to address all the related questions. For instance, if you go for the 24-week period, can you apply for forgiveness as soon as you’ve exhausted all the funds, or do you have to wait until the end of the 24 weeks?
Then there’s the sticky problem of potentially running out of tax-planning time before the end of 2020. Not having specific guidelines early on, banks unintentionally loaned way too much money to some businesses. If you weren’t meticulous about your calculations when applying for the loan, you could find your forgiveness application is denied. A 24-week loan period pushes the forgiveness out close to the end of the year. This early on, who’s to know what your tax return will look like if your application for forgiveness isn’t approved or still pending when it is time to file your taxes?
But for a couple of reasons I’m still eyeballing the 24-week period for those business owners who did their due diligence when computing their loan amounts and maintaining proper records: (1) Even if you expend all the PPP funds on approved expenses way before the deadline, you’ll have plenty of time to scrutinize every figure in your loan forgiveness application before turning it in. That should go a long way in increasing your chances for forgiveness.
And (2), so far the declining unemployment rates reflect the PPP’s positive impact, and changing guidelines have favored the small business owner repeatedly. It’s likely any new changes will continue to favor the small business owners. I.e., remember those rumors of additional funding. But even if you don’t wind up with more loan monies, at least you’ll still be able to enjoy some quality toilet paper.
Still confused about the best way to move ahead with the PPP, including the 8-week vs. 24-week loan period? Give us a call at Law Offices of Christy Lee, P.C. We’ll analyze the facts, figures, and rules applicable to your specific situation and offer you sound guidance designed to help achieve loan forgiveness.